Billboard Magazine last week presented the final music sales numbers for 2012, and it appears to be filled with woe for the future of the compact disc.

The CD, which first became commercially available in 1982, has seen a steady decline first with the emergence of Napster (the first effective mp3 distribution device) in 1999 and then with the launch of Apple’s iTunes (and the invention of the iPod) in 2001 that made downloading digital music files “legitimate.”

But despite the constant heralding of its demise, the compact disc continues to survive, though its pulse weakens ever-so-slightly year after year. Case in point: Billboard reported that for the Year of Our Lord 2012, the sales of physical CDs (according to Nielsen SoundScan) were down a whopping 13 percent compared to 2011, reflecting a decline in U.S. album sales of 4 percent to 315.96 million from 330.57 million in 2011.

While CD sales continued to flounder, digital album downloads continued to increase their share of the overall album sales pie with a 14 percent gain to a record 117.68 million. Says Billboard, 37 percent of all albums sold in 2012 were downloads, up from 31 percent in 2011. For the first time in January 2012, digital surpassed physical with 50.3 percent of all music sales.

You might be scratching your head thinking, “Gee, 315 million albums seems like a lot to me.” Contrast that number with 2001, when Nielsen SoundScan reported CD album sales of 712 million. We’re talking a nearly 50 percent decline in album sales (of any format) in 11 years. It begs the question: Are people listening to less music or simply buying less music because they’re either 1) stealing it or 2) getting it from “free” sources, which could include anything from websites to free streaming services such as Pandora and Spotify?

For a local perspective, we turn (as we always do) to Mike Fratt, general manager and head buyer at Homer’s Records. Fratt said what’s driving the decline in sales over the past two years is the “huge reduction in (physical inventory) and square feet devoted to music retail at mass merchants” like Best Buy and Target.

“This is driving many people to online stores like Amazon,” Fratt said. “Non-traditional sales (online stores, non-music retail, non-mass merchant) biz was way up again this year. Unfortunately, it’s not enough to make up the difference, as many consumers think (record) labels have stopped making CDs. We heard that comment a lot this holiday season.”

In fact, there are no plans to abandon compact disc production before the end of this decade, Fratt said. NARM (not the North American Registry of Midwives but the National Association of Recording Merchants) and the record labels project that sales of compact discs will remain an important part of the total retail music business through the next five years.

The big box stores’ retreat from music sales would seem to be boon for stand-alone record shops. Unfortunately, the shift came too late for many. According to The Wall Street Journal, the number of physical record stores dropped 77 percent between 2000 and 2010 and is expected to decline another 11.6 percent by 2016. HMV, Tower Records, Sam Goody’s and Virgin have all gone the way of the dinosaur.

Meanwhile, there are still about 2,000 independent music stores like Homer’s, according to the Huffington Post. And their sales are growing. Fratt said Homer’s CD sales were up last year in both dollars and units.

“Being up in dollars is significant because the average price of a CD has fallen to nearly $10 as labels have radically reduced prices in the last two years,” Fratt said. “We now have a quarter of our CD inventory below $8 and a third below $10.”

Fratt said music lovers who want to buy an entire album’s worth of music still choose physical over digital 65 percent of the time. “New music (digital sales) is driven by songs,” Fratt said. “Very much like the ‘50s, ‘60s and early ‘70s when 45 rpm’s drove the business before albums took off.”

But the other life blood for independent record stores is vinyl -- that’s right, those old-fashioned records that you play with a record player, the format that everyone shoveled dirt over when the CD emerged as the medium of choice in the ‘90s.

For the fifth consecutive year, more vinyl albums were sold than in any other year since SoundScan launched in 1991, reported Billboard. In 2012, 4.55 million vinyl LPs were sold -- up 18 percent compared to 2011's then-record haul of 3.87 million. And 67 percent of those vinyl albums were purchased at independent music stores.

“While some indies are reporting lower CD sales for 2012, everyone was up in vinyl again,” Fratt said, adding that vinyl was “huge at Christmas, but was up all year long.”

So with all this in mind, when was the last time you bought a CD or a vinyl album?

Maybe even more important: When was the last time you printed out a photo you took with your cell phone? When was the last time you printed a letter or clipped a newspaper article? When was the last time you burned a DVD of a home movie? These were all activities we used to do regularly when we felt we needed a physical backup of our digital memories for fear that our computer hard drives would crash and we'd lose it all.

Today we have backups of everything, and backups of backups that reside in the mystical “cloud.” We’re becoming confident that our digital memories are secure (whether they are or not) and are throwing away the backups, clearing out the clutter, selling back our compact discs.

More than anything, it’s this new confidence in digital security that could kill off the compact disc once and for all as we begin to walk the digital tightrope without a net.

Over The Edge is a weekly column by Reader senior contributing writer Tim McMahan focused on culture, society, the media and the arts. Email Tim at tim.mcmahan@gmail.com.

posted at 04:05 pm on Tuesday, January 08th, 2013

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